GBP/SEK Exchange Rate Rangebound, Swedish Krona Traders Brace for Riksbank Rate Decision
The Pound Swedish Krona (GBP/SEK) exchange rate held steady this morning, with the pairing currently trading around 12.475kr as Swedish markets brace for tomorrow’s interest rate decision from the Riksbank, which is forecast to hold at 0%.
However, the Swedish Krona’s gains have been held back by growing uncertainty over the global economy, with China’s coronavirus epidemic threatening to weaken the Chinese economy, the second-largest in the world.
Johan Woxenius, a Professor of Industrial and Financial Economics at Gothenburg University, commented on how the coronavirus epidemic could affect the Swedish economy in the near-term.
‘The problem I see ahead of me is that some time-critical goods won’t arrive because flights aren’t running. What we could be affected by short term is if our production systems have individual electronic components that are flown here and which we’re dependent on to build cars or machines.’
Any further signs that the epidemic could spread and weaken the global economy would have a negative impact on the trade-reliant Swedish economy. Consequently, we could see the SEK/GBP exchange rate begin to dip.
GBP/SEK Exchange Rate Steady, UK Autumn Budget Statement in Focus
The Pound (GBP) failed to gain on the Swedish Krona (SEK) after yesterday’s quarter-on-quarter flash UK growth report showed a stagnation at 0% in the final quarter of 2019, leaving some Sterling traders feeling jittery over the prospects for the British economy in the year ahead.
Tej Parikh, Chief Economist at the Chief of Directors, commented:
‘It’s likely that political uncertainty and unwinding stockpiles caused the economy to flag at the end of last year. However, firms entered 2020 with more of a spring in their step. Confidence has shot up, while hiring plans and investment intentions have also risen a notch, but the post-election bounce may tail off.’
Sterling traders will be awaiting today’s autumn budget forecast statement before the HM Treasury, with any further signs of dovishness about the economy post-Brexit weakening the GBP/SEK exchange rate.
Analysts at the Australia and New Zealand Banking Group were optimistic about the UK’s economic outlook, however, commenting:
‘The focus is on Q1 for a rebound. Overall, activity may have been weighed by Brexit uncertainty, the general election and global trade tensions. Looking forward, early 2020 data are signalling a rebound. And if that doesn’t materialize, BoE Governor Carney has signalled the BoE might need to add more accommodation.’
GBP/SEK Outlook: Could the Swedish Krona Sink on Coronavirus Fears?
The Swedish Krona (SEK) will continue to remain sensitive to global economic developments, with the Swedish economic outlook being plagued by uncertainty over China’s coronavirus outbreak and threatening to derail the nation’s economic growth.
If Sweden continues to show signs of being hit by a slowing global economy we could see the Swedish Krona (SEK) begin to sink against Pound Sterling (GBP).
The GBP/SEK exchange rate will be driven by insights into the UK’s economic outlook post-Brexit this week, with any further signs of an imminent slowdown in the British economy proving Pound-negative.